It is a truism of the real estate industry that the three most important elements are location, location and location. This triple-edged method for evaluating the desirability of a neighborhood and its homes has been used so often it is now a time-worn cliché, but just what makes one location great and the next subpar?
Appearances can sometimes be deceiving - streets lined with well-kept homes and tidy white picket fences could be hiding troubled schools or a looming epidemic of crime and drug addiction. A neighborhood filled with what appear to be chaotic streets could be concealing an up-and-coming class of storekeepers and entrepreneurs.
So how do you evaluate a neighborhood as you shop for a home or look for an investment property? There are certain statistics that can reveal the hidden assets, or the troubling trends, that surround those innocent-looking properties.
Some of these stats are relatively easy to find, accessible through public records searches and some simple online research. Others may require a trip to the local courthouse, and still others may mean seeking out elected officials and others in a position to know about the local environment. Here are some common statistics that could tell the tale, and help you take the pulse, of a targeted neighborhood.
Statistic #1 - Public vs. Private School Attendance
Even if you do not currently have kids, you should care about the quality of the local school. The quality of public education plays a role in everything from crime rates and unemployment to the availability of services and cultural opportunities.
At first glance, the schools in your targeted neighborhood may appear to be exceptional, but a deeper dive could tell a different story. If a high percentage of your future neighbors are sending their kids to private school, and paying those high tuition bills, the local public schools might not be as good as they seem.
Statistic #2 - Trends in Crime
The rates of violent and property crime are obviously important to any would-be homeowner. After all, you want to feel safe and secure in your new home, and you want to make sure your possessions will still be there after a vacation or extended absence.
There are several ways to look at crime rates, and each method has its own advantages and drawbacks. If you simply look at overall crime statistics, you can get a feel for the neighborhood and its safety, but recent trends might tell you even more.
If a historically low-crime neighborhood has recently seen an uptick in arrests, this trend could indicate a growing problem. Even if the neighborhood you are targeting seems safe, it pays to check into recent trends for a more complete picture.
Statistic #3 - Historical Home Sale Values
The trend in home sales and selling prices can tell you a lot about the neighborhood, so do a deep dive and learn as much as you can. Is the trend in home sale prices steadily up or have there been some troubling dips along the way? Are homes selling faster and faster, or has the time on market been steadily creeping up?
The answers to these questions can tell you a great deal, and it is worth your time and effort to seek them out. Selling prices may not tell the whole story, but when combined with other factors, they can be very revealing.
Statistic #4 - Trends in Home Listings
The number of local listings matters in several ways, and this is an important statistic to research. If there are lots of homes for sale in the neighborhood you are targeting, the wealth of housing stock might give you some additional negotiating power, but before you put in an offer, you need to dig a bit deeper.
If everyone in town is suddenly selling out, there is probably a good reason. It could be a recent change in zoning that brought large industrial-scale agriculture to a previously residential-only neighborhood. It could be the loss of a major employer, one that left thousands of people unemployed and unable to pay the mortgage. But no matter what the reason, it could have an impact on future home prices, and the resale value of the property you are contemplating.
For many people, the roof over their head will be their most important and most valuable investment, and it pays to make the most of it. Whether you are in the market for your first home, seeking out your dream home or downsizing into your retirement property, doing your homework now could prevent you from making a heartbreaking, and expensive, mistake. The four key statistics could help you find the perfect neighborhood, one where you can live happily and raise a great family.